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The article says post tax but the standard is closer to what you're saying. For a landlord renting a property, for instance, the safe rule of thumb is typically
by harmmonica 10y ago
The article says post tax but the standard is closer to what you're saying. For a landlord renting a property, for instance, the safe rule of thumb is typically for your tenant to have a gross annual salary of 40x the monthly rent (which for a 2k rental would be 80k gross salary). Using 145k is way too conservative. Similarly, when buying a house, the debt-to-income ratio is calculated on gross (pre tax) income as well and is 28% for housing costs (principal, interest, taxes and insurance), which lines up pretty well with the standard rental calculation.
- irrational 10y agoHuh, maybe it's time for my family to move on up since my gross annual salary is 80x my current housing payment.
- jdavis703 10y agoWell there goes your retirement savings... (Assuming that's where your extra money was going).
- cmurf 10y agoOr buy a 2nd house, or increase savings. The big problem spending more than 30% is if you're a renter, it make savings, even a rainy day fun let alone longer term or a moving budget, much harder.